Aggressive Federal Reserve interest rate hikes, persistent inflation and a recent U.S. credit downgrade have investors concerned that a recession may be coming. When the economy tanks, even most high-quality stocks get dragged down with it. However, during the past two U.S. recessions in 2008 and 2020, there were still a handful of stocks that significantly outperformed the S&P 500. These recession-resistant stocks might help investors play defense if the U.S. dips into a recession in 2023.
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Here are seven stocks CFRA Research analysts recommend that outperformed the S&P 500 in both 2008 and 2020:
| Stock | S&P 500 outperformance (2020) | S&P 500 outperformance (2008) |
| Walmart Inc. (ticker: WMT) | 5.1% | 56.3% |
| Abbott Laboratories (ABT) | 9.8% | 33.6% |
| Synopsys Inc. (SNPS) | 70% | 9.9% |
| Accenture PLC (ACN) | 7.8% | 29.5% |
| T-Mobile US Inc. (TMUS) | 55.7% | 14.8% |
| Walt Disney Co. (DIS) | 9% | 8.8% |
| Netflix Inc. (NFLX) | 50.9% | 50.8% |
Walmart Inc. (WMT)
It’s no surprise that discount retailer Walmart outperformed during each of the past two recession years. Americans can’t go without groceries when times get tough, but they can save money by bargain hunting at Walmart. Analyst Arun Sundaram says Walmart has plenty of growth levers to pull heading into 2024 to continue its recent positive operating momentum and expand margins. Sundaram says Walmart’s first-party e-commerce business has reached a profitability inflection point, and higher-margin businesses such as third-party marketplace and advertising are outgrowing Walmart’s core brick-and-mortar retail business. CFRA has a “buy” rating and $175 price target for WMT stock, which closed at $157.51 on Aug. 21.
S&P 500 outperformance: 5.1% (2020), 56.3% (2008)
Abbott Laboratories (ABT)
Abbott Laboratories is a diversified health care products company. It’s understandable why many health care stocks performed well during the pandemic in 2020, but Abbott’s shares actually outperformed by an even wider margin in 2008. Analyst Paige Meyer says Abbott’s diversified business model, strong balance sheet and rising dividend will help the stock outperform its peers in the long term. Meyer estimates slumping COVID-19 related sales will drag Abbott’s revenue down 9% in 2023, but Meyer says investors should anticipate a return to 5% revenue growth in 2024. CFRA has a “buy” rating and $130 price target for ABT stock, which closed at $103.87 on Aug. 21.
S&P 500 outperformance: 9.8% (2020), 33.6% (2008)
Synopsys Inc. (SNPS)
Synopsys provides a platform on which engineers can design and test semiconductor chips and other software applications. The global semiconductor industry is a secular growth market, so demand for chip testing and design services is constant — even during an economic downturn. Analyst Garrett Nelson says Synopsys is the market leader in electronic design automation artificial intelligence technology, which the company could use to upsell existing customers as their three-year contracts roll over. Nelson says he is also confident in incoming CEO Sassine Ghazi. CFRA has a “strong buy” rating and $495 price target for SNPS stock, which closed at $436.47 on Aug. 21.
S&P 500 outperformance: 70% (2020), 9.9% (2008)
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Accenture PLC (ACN)
Accenture is a global information technologies services firm. The company generates nearly half its revenue from North America, about a third from Europe and the remainder from other parts of the world. Accenture’s diversified consulting and services business made it recession-resistant in the past and will likely continue to do so in the future. Analyst Keith Snyder says Accenture’s large customer base, impressive balance sheet and track record of generating industry-leading earnings growth will help the company’s business hold up well in an uncertain macroeconomic environment. CFRA has a “strong buy” rating and $341 price target for ACN stock, which closed at $306.51 on Aug. 21.
S&P 500 outperformance: 7.8% (2020), 29.5% (2008)
T-Mobile US Inc. (TMUS)
Following its merger with Sprint, T-Mobile is now the second-largest U.S. wireless provider. T-Mobile has generated consistent growth in a challenging industry, even during economic downturns. Snyder says T-Mobile will continue to gain market share from its peers. He says T-Mobile has potential to improve free cash flow and notes T-Mobile’s 5G network is at least a year ahead of both AT&T Inc. (T) and Verizon Communications Inc. (VZ). However, Snyder projects a 0.9% revenue decline for T-Mobile in 2023 and another 3.8% drop in 2024. CFRA has a “strong buy” rating and $175 price target for TMUS stock, which closed at $135.55 on Aug. 21.
S&P 500 outperformance: 55.7% (2020), 14.8% (2008)
Walt Disney Co. (DIS)
Walt Disney is one of the largest and most diversified media and entertainment companies in the world. That diversification has helped Disney’s business remain in high demand during a wide range of economic conditions, including a global pandemic. Even when Disney’s theme parks, cruise business and movie and TV studios were shut down in 2020, Disney+ streaming subscriptions surged. Analyst Kenneth Leon says strategic reviews are underway for some of Disney’s unique, valuable assets that could be monetized via spinoffs, including TV networks ESPN, ABC and FX. CFRA has a “buy” rating and $105 price target for DIS stock, which closed at $85.88 on Aug. 21.
S&P 500 outperformance: 9% (2020), 8.8% (2008)
Netflix Inc. (NFLX)
At first glance, it may seem strange that video streaming service Netflix, which relies on discretionary spending, would perform so well during times of economic difficulty. Netflix’s strength in 2008 and 2020 may have to do with Americans cutting back on more pricey entertainment options during financial hardship. Netflix provides access to thousands of shows and movies for as low as $6.99 per month. Leon says Netflix will continue to be a long-term beneficiary of the secular shift in TV viewership from linear networks to streaming. CFRA has a “strong buy” rating and $520 price target for NFLX stock, which closed at $408.29 on Aug. 21.
S&P 500 outperformance: 50.9% (2020), 50.8% (2008)
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7 Stocks That Outperform in a Recession originally appeared on usnews.com
Update 08/22/23: This story was previously published at an earlier date and has been updated with new information.
